Public Bill Committee

[Mr David Amess in the Chair]

Clause 6  - Payment of levy for non-UK heavy goods vehicles

Question proposed, That the clause stand part of the Bill.

Stephen Hammond: It is good to see you in the Chair this afternoon, Mr Amess. I hope you will enjoy the proceedings as much as we have.
Clause 6 runs parallel to clause 5: clause 5 relates to UK-registered vehicles, and clause 6 relates to non-UK registered vehicles. Clause 6 states that the levy for non-UK registered vehicles must be paid for the period that the vehicle
“is used or kept on a road to which this Act applies.”
Non-UK registered vehicles must have the levy paid for a year, or any shorter period chosen by the person paying the levy. In practice, they could pay the levy daily, weekly, monthly, six-monthly or annually. The levy must be paid at the appropriate rate for the type of vehicle as set out in table 1 of schedule 1, which states that the rates are payable by vehicle weight band. The levy for one year is shown in the column headed “Yearly rate”. The stated rate for band A vehicles is £85; for band G vehicles it is £1,000. The levy for the half-yearly rate is between £51 for a band A vehicle and £600 for a band G vehicle.
The levy for a one-month period is shown in the column marked “monthly rate”. The rates vary from £8.50 for a band A vehicle and £100 for a band G vehicle. The levy for one week is shown in the column headed “weekly rate”. That shows £4.25 for a band A vehicle and £50 for a band G vehicle. The levy for one day is shown in the column labelled “daily rate”. It is £1.70 for band A and £10 for band G.
The appropriate band is determined by vehicle type, revenue weight and number of axles as specified by paragraphs 2 to 4 of schedule 1. I am clear that the daily, weekly and monthly levy rates we have set all comply with relevant EU law. The Eurovignette directive states that the daily rate can be no more than 2% of the annual rate and no more than €12. The weekly rate can be no more than 5% of the annual rate and the monthly rate no more than 10%.
To clear up a point that has been at issue previously, non-UK vehicles should pay the levy prior to their arrival in the UK. They can pay via the website or over the telephone.

Andrew Bridgen: Can the Minister explain what will happen if there is a currency fluctuation between the pound and the euro?

Stephen Hammond: I can indeed, and I will come back to that point in a moment. I was halfway through explaining how the levy could be paid. We intend that it should be paid prior to arrival in the UK. We intend to allow card payments via the website or, as I said, over the telephone. It will also be possible to pay on the ferry on the way over, and of course, as I stated previously, on arrival in the UK by stopping at the port, going on to the website or making a telephone payment.
My hon. Friend the Member for North West Leicestershire asked about currency fluctuations. At the moment, there is an issue regarding the maximum level set by the Eurovignette. The rate is rounded up and adjusted annually for inflation. If the prevailing annual exchange rate changes, some adjustment will need to be made to the rate. However, I do not anticipate that happening at the moment.
As for the matter to which my hon. Friend probably wished he had drawn attention, for states not using the euro, there is also some leeway for fluctuations. However, if there are currency fluctuations, an annual rate will be set under the Eurovignette, and we shall ensure that our charges are compliant with that.

Stephen Doughty: The Minister mentioned paying on the ferry. Can payments also be made on the Eurotunnel services or at the terminals at either end of the channel tunnel?

Stephen Hammond: Yes, if there is connectivity through the tunnel. People could go on to the website via a device suitable for use in the tunnel, and they would be perfectly at liberty to stop at either end and pay. Such circumstances are covered.

Jim Fitzpatrick: I want to refer back to Tuesday’s discussion about payment and enforcement and whether automatic number plate recognition cameras would be adequate. There was a strong body of opinion among those hauliers who were in favour of a visible disc demonstrating that the vehicle levy had paid. The disagreement between the hauliers was surprising, given that ANPR cameras have proved successful in policing and enforcing the congestion charge in London.
When introduced, the ANPR technology was greeted with a degree of scepticism but has proved to be very effective and efficient. It gives the public confidence that no one can avoid paying the congestion charge—other than those who are trying to beat it through criminal means. I was somewhat surprised that the some of the professional hauliers who gave evidence on Tuesday remained sceptical about the effectiveness of ANPR cameras, to the extent that a disc in the cab was promoted by some of the larger as well as the smaller operators.
This issue demonstrates the degree of unfairness felt within the industry about being taken advantage of by European competitors. Hauliers want to ensure that payment of the levy is clearly visible, and that the harshest enforcement measures are available. For their satisfaction and peace of mind, not that of the authorities, the Government, the police or VOSA, if they see a foreign vehicle—given that they do not have the technology to identify whether the ANPR cameras have picked up a transgressor—they want to be sure that it has paid. I can understand that, given how unfairly such people feel they have been treated by Governments for many years.
The success, efficiency and effectiveness of the congestion charge in London, policed and enforced as it is by ANPR cameras, reassures us that such a mechanism is the appropriate way to police the system and make sure that foreign hauliers cannot beat it. Perhaps the Minister can give us even greater reassurance, because I imagine the most likely place to be able to identify such vehicles is at the point of arrival. It was said on Tuesday that, because the ports are in constrained circumstances and such vehicles try to get away as quickly as possible, they might not all be captured, so the VOSA sites outside the ports could catch them. Because the vehicles are coming off in lanes from ships or, as my hon. Friend the Member for Cardiff South and Penarth said, from Eurostar, that is the time when the majority are likely to be identified and captured. If the Minister gave us that reassurance, I am sure it could be communicated back to the logistics industry, whose members clearly still have some reservations about ANPR cameras.

Stephen Hammond: Like the hon. Gentleman, I was intrigued to hear the need for paper certification being discussed on Tuesday. Interestingly, it was raised by a limited number of witnesses, and particularly by the gentleman representing DHL, which has a fleet on the continent. I thought that significant, for a number of reasons.
When the Eurovignette was initially introduced in Europe, drivers had to show it, but since 2008 a number of countries that have signed up for it have accepted that paper recognition—the disc in the windscreen—is not appropriate as it is not a very effective method of enforcement. Although it may show some people that payment has been made, from the enforcement agencies’ point of view it does not necessarily eliminate the possibility of fraud or the ability to change the disc. The gentleman from DHL said on Tuesday that there are different coloured discs for each day, but it is possible to put a disc of the correct colour for each day back in the windscreen.
Like the hon. Gentleman, I am not convinced that putting a piece of paper in the windscreen would achieve what the Bill seeks to achieve. I am not even convinced that it would reassure UK hauliers. Many of them, as he rightly points out, will have experience of systems such as that for the London congestion charge and will therefore know that they are effective.

Jim Fitzpatrick: The Freight Transport Association briefing, which I picked up only at lunch time—it was not there when I checked my e-mails at 7 o’clock this morning—says:
“Evidence of payment should be held centrally with the option for a printed version to be downloaded as required.”
For drivers of foreign vehicles, the ability to download a receipt—they would not have to download it—would give them peace of mind. If challenged, they would have the reassurance not only of the enforcement agencies’ ANPR system, but a piece of paper making it clear they had paid.

Stephen Hammond: Indeed they would, but as the FTA statement that the hon. Gentleman referred to makes clear, the key point is that the record that they have paid will be held at the central database. If a foreign lorry is parked outside West Ham’s ground to deliver the afternoon’s supply of beef burgers for when West Ham ritually beat another side, it is all very well for me or the hon. Gentleman to wander up to that vehicle and challenge its owner, driver or keeper; but it is for VOSA to ensure that the vehicle has paid, not us. An owner or driver can chose to download the receipt and show it, if he wishes. [ Interruption. ] However, as inspiration has just reminded me and as I said earlier, the information will be on the database, and that is the key point.
The other point, which we have discussed—a number of representatives from the logistics industry recognised it as an issue on Tuesday—is the administrative cost, albeit relatively slight, of some form of physical recognition, which would be incumbent upon foreign hauliers in excess of the levy. There are therefore two issues with physical recognition: the sheer propensity for fraud, and the administrative costs.
The hon. Gentleman is, of course, right, and I ought to give him some reassurance about the automatic number plate recognition system. He mentioned the system in London, which we all know works well. He will also have borne in mind the evidence from the two VOSA officials. They intend to ensure that there are cameras operating not only at ports around the country, but at sites such as their major centre at Ashford, which will catch a number of people coming through key UK entry points. There is also the ability to have cameras around the country’s strategic road network and for random stops. As importantly, VOSA made the point that a number of cameras will be focused on the out-lanes as well as the in-lanes at ports to catch people leaving. A quite widespread use of enforcement mechanisms is in place.

Julie Hilling: Are there cameras at all the ports of entry? I am thinking about some of the smaller ports. If not, will they be in place in time for the legislation coming into force?

Stephen Hammond: I cannot answer the hon. Lady with absolute certainty, but it would be my estimation that all the major ports of entry will have those cameras. I would be surprised if every single port, of which there are a huge number and diversity, had those cameras—I am not sure that that is even technically possible—but let us assume there was a small port on the south coast through which a foreign vehicle entered. Almost inevitably, to get to its distribution depot or its delivery, it would be forced to go on the strategic road network and almost certainly it would be caught. However, I am happy to clarify, perhaps on Report or on Third Reading, her exact point. I hope she will accept my reassurance that all the major ports where the vast majority of lorries enter will be covered by VOSA enforcement cameras.

Michael Connarty: The evidence we got was quite reassuring. I am trying to work out the stage-by-stage logic. If a vehicle arrives at a port of entry, clearly the number plate will be recognised. The driver may or may not have pre-purchased, or purchased in port or on the ship, the necessary levy for the number of days he thinks he will be in the country. If he has not, is there any intention that the vehicle will be stopped at the point of leaving if he has been recognised as entering the port, but not having paid the levy by that time? Will we rely on something further up the road to stop such drivers? I would be much reassured if that happened in an access check at an exit point, and that they could not leave because they had not paid their levy.

Stephen Hammond: It is my understanding that the whole point of having cameras at exit points—

Michael Connarty: Forgive me, I may have misled the Minister. I am talking about entering the port—say, a ship coming into Dover—and being recognised as coming on to UK soil, but when a vehicle leaves that port to go on to the roads, will the system be good enough and swift enough to say, “This vehicle is about the leave the port of entry and drive on to the British roads without having paid the levy.”? Or will we have to rely on something further up the road to catch them?

Stephen Hammond: I have spoken to VOSA about that, and I hope that the VOSA evidence to the Committee was clear about it. VOSA absolutely intends to talk to ferry operators. As someone comes off the boat and comes into the UK, they will be identified at the port and stopped. There are some instances where the volume coming through might mean that they cannot be caught, which is why VOSA has made the point that, certainly for the biggest ports, they will have major stopping points a few yards further down. So absolutely, the intention is that there will be the toughest enforcement possible.

Question put and agreed to.

Clause 6 accordingly ordered to stand part of the Bill.

Schedule 1 agreed to.

Clause 7  - Rebate of levy

Jim Fitzpatrick: I beg to move amendment 4, in clause7,page5,line19,leave out subsection (5).
I suppose that, as a courtesy to you, Mr Amess, as a fellow West Ham fan, I should point out that the Minister referred to West Ham United because, this morning, we mentioned West Ham’s victory against Chelsea on Saturday. I say that in case you were confused and thought that the Minister had suddenly converted to being an east Londoner like us. There you go.
Amendment 4 is probing. We raised a straightforward question a number of times during our consideration of the Bill and the Ways and Means resolution, specifically at column 863 of the Official Report on 23 October. Clause 7(5) says:
“The Secretary of State may specify conditions with which a person must comply before making an application for a rebate.”
First, the question obviously is, why does clause 7(5) say “may” rather than “shall”? Surely there would be an expectation that conditions would be laid down for the application of a rebate. Given the detail in the Bill about the potential of rebates in terms of criteria, length of time, validity and so on, I imagine that guidance must be available to those who would want to claim in the event that they conformed to some of those criteria. We would have thought that the Secretary of State would automatically lay down conditions, for the avoidance of any doubt. That is why we tabled the amendment.

Stephen Hammond: I am grateful to the hon. Gentleman for tabling this probing amendment. I hope that I can offer him reassurance.
Clause 7 sets out the conditions for providing rebates. Subsection (5) provides the power for the Secretary of State to specify conditions with which a person must comply before making an application for a rebate. The amendment would remove that power.
It is important to retain subsection (5) for administrative purposes. It means that the Secretary of State—or, in this or some other cases, the Driver and Vehicle Licensing Agency, the supplier of the system for foreign operators—will be able to set conditions around making applications for rebates—for example, timing and how to submit claims. Without that power, it is possible that those sorts of operation may be adversely affected.
The Bill obviously gives indications of conditions that will need to be met to obtain the rebate, and they are specified in subsection (6). Although that subsection provides only some detail of the requirements—I accept that—we deliberately do not wish to prescribe the conditions too tightly, as there may be changes in the way that documentation is needed—for instance, to demonstrate when a vehicle was stolen or recovered, or evidence that it was stolen. Also, the way that evidence should be supplied may change over time. Therefore, overly prescriptive requirements could also be interpreted as being difficult to administer and potentially discriminatory in the future.
For UK operators, the rebate requirements are exactly the same as the rebate requirements for vehicle excise duty. The rebate requirements for foreign operators will have an impact on the procurement of the payment system for foreign operators. We will ensure that during that procurement process the requirements specified will always be reasonable and, where possible, similar to those that UK operators will have to comply with, and therefore not be overly bureaucratic for operators.
This subsection is about the administration of the rebate and it is not intended to give the Secretary of State significant powers over what qualifies for a rebate. In particular, the formula setting out the amount of the rebate, which is the most important thing for the operator, is in the Bill.
On the point about “may” rather than “shall”, the intention is to give the Secretary of State slightly greater discretion over the issues I talked about. I accept that “shall” could have been used, or could still be used, but “may” covers it. I trust that, with those reassurances, the hon. Gentleman will withdraw his amendment.

Jim Fitzpatrick: I am reassured by what the Minister has said. I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Question proposed, That the clause stand part of the Bill.

Jim Fitzpatrick: I want to return briefly to rebates and the surrender of such. I seek further reassurance and consideration from the Minister in respect of the VED reductions for cleaner vehicles. The point was made that fleet hauliers might be deterred from purchasing cleaner vehicles because of the way the levy and VED will be put together. On the subject of rebates, I want reassurance that, given the surrender of VED is straightforward and everybody understands it, the surrender of the levy certificate will be equally straightforward, and hauliers will be able to reclaim what is no longer required because the vehicle is no longer in operation. Will the Minister comment on those aspects?

Michael Connarty: I have been looking at a way to make things entirely equal between the UK and the foreign vehicle owner. I have some disappointment that the measure will not bring in such a huge amount of money that it would reduce the cost to the HGV levy payer in the UK. It would be wonderful if it did.
Constituents of mine have put farm vehicles in a park, thinking that they were off the road, but they have suddenly found themselves fined by VOSA for not going through the SORN process for that vehicle, even though it has no wheels, has become a receptacle for animals and in no way moves.
I am concerned about someone who has put an HGV vehicle off the road, under the description in clause 7(2)(c), having paid the full yearly HGV amount and possibly a levy. I wonder how they can get back as much money as possible, if they do SORN. If they have not paid more than one month—one month to claim back—they cannot claim anything back.
Presumably, a foreign vehicle in the same situation that has just been immobilised in some way would be in a better position. Such persons would not be coming into the UK so they would not buy a levy. They would be on a level playing field—they would not have any outlay to lose—whereas a UK HGV owner would have an outlay they could not recover unless they had more than a month to claim back. That seems slightly unfair and not to the advantage of the UK levy payer.

Stephen Hammond: I am not sure that I entirely follow the hon. Gentleman. If I understand him correctly, his point is about the difference between a UK haulier whose HGV might laid up, but who might not able to claim because he had paid the whole levy but wanted to reclaim it after a month, and a foreign haulier who might not. Surely, is not the point—I think this is what the hon. Gentleman meant, although I might have misunderstood—that, if the foreign haulier had not brought his lorry to the UK, he would not be within—

Michael Connarty: That is obvious, but the UK haulier would not be using it on the roads either, so they would have paid a levy for road use that they would not be able to use, so it is the same—why do they not get it all back?

Stephen Hammond: There is a complex formula for calculating the levy, which means that—

Michael Connarty: Tenths.

Stephen Hammond: Yes. Potentially, if the levy were paid and a rebate of the levy were claimed within the first month of having paid it, the repayment of the levy might be somewhat larger. Also, rebates cannot be claimed for periods under a month, so there is no advantage to a foreign haulier in that regard. I think that that is what the hon. Gentleman is driving at.

Michael Connarty: I am driving towards that, but why not twelfths? Why not less than twelfths? What is the problem? If the Minister has been told, or the calculation having been done, that if the administration is anything less than one twelfth it is more expensive than the money to be returned, I can see the logic, but it has not gone in that direction, because someone has chosen tenths.
If the levy is paid by an HGV user in the UK who thinks that they will be on the road, but then they are not on the road, they might lose up to one tenth of that claim. If all they needed to claim back was one twelfth, they would not get it back because it has to be one tenth; it has to be above one twelfth. That seems slightly unfair to the UK haulier. I am looking for something that is much more beneficial to the UK haulier, as well as putting an adequate imposition on a foreign haulier.
Why is the figure not twelfths? Why is it not one week? Is that an economic calculation or just a figure plucked out of the air?

Stephen Hammond: I hope that I can help the hon. Gentleman. In all cases, the rebates are available for whole outstanding months of the levy remaining. The rebate calculation is such that for an annual levy it is different, because the charge for an annual levy is cheaper in the first place, as it costs the equivalent of 10 months. If we were to allow someone to try to claim after one month, they would, as I perhaps inadequately explained earlier, get a greater sum back. That is because the annual levy is a discounted amount, as opposed to others.
I apologise for my earlier explanation being inadequate. The clause provides for the rebate, and states who is entitled and in which cases.

Question put and agreed to.

Clause 7 accordingly ordered to stand part of the Bill.

Clause 8  - Exemptions and reductions

Question proposed, That the clause stand part of the Bill.

Stephen Hammond: The clause exempts from payment of the levy certain rigid goods vehicles that pay VED at the basic goods vehicle rate and provides a power for the Secretary of State to make regulations that may exempt certain categories of HGV from paying the levy. I want to make it clear that the vehicles that are excluded from the levy by clause 8(1) are excluded because they are subject to paragraph 9(2) of schedule 1 of the Vehicle Excise and Registration Act 1994, with which I know all Committee members are terribly familiar, or will be by the end of consideration in Committee.
Those vehicles are showmen’s goods vehicles and islands goods vehicles—those restricted to doing their work on small islands—and vehicles loaded only in connection with a person learning to drive or taking a driving test.
Vehicles using a trade licence are exempted under section 11 of the 1994 Act. Essentially, that trade licence is used only when a vehicle is being transferred from the ownership of one person—the registered owner or keeper —to another. Therefore, it seems appropriate that they should be exempt from the levy.
I wanted to ensure that the Committee understood those exemptions.

Stephen Doughty: The Minister will forgive my lack of familiarity with the 1994 Act and the details of the exemptions. Will he clarify whether HGVs used by our armed forces are included, particularly given the pressure on their budgets at the moment? I am thinking also of supply and logistics vehicles that transport heavy goods to and from bases.

Stephen Hammond: Despite the hon. Gentleman’s unfamiliarity with that Act, he asks an interesting question to which I cannot give a definitive answer. I apologise, but I will write to the Committee to ensure that I answer that question fully. I hope he will take my assurance on that point.

Question put and agreed to.

Clause 8 accordingly ordered to stand part of the Bill.

Ordered, That further consideration be now adjourned. —(Nicky Morgan.)

Adjourned till Tuesday 11 December at five minutes to Nine o’clock.